RYM · RYTHM, Inc.

RYTHM, Inc. has materially restructured its intellectual property licensing arrangements with GTI Core, LLC, an indirect wholly-owned subsidiary of Green Thumb Industries Inc. The amendments convert the consideration structure from a variable monthly license fee based on product sales to a fixed annual cash fee totaling $70.0 million. This shift provides RYTHM with predictable, recurring revenue streams, a strategic move highlighted by management as establishing "predictable, long-term revenue in a way that is virtually unmatched in the THC space."

The transaction rationale is explicitly tied to regulatory compliance. The filing states the amendments were executed following discussions with the Nasdaq staff to ensure the Company’s compliance with Nasdaq Capital Market listing standards regarding revenue derived from the federally illegal cannabis industry. By securing fixed fees, the company addresses listing standard concerns while maintaining its commercial relationship with Green Thumb, which indirectly owns approximately 33% of RYTHM's outstanding common stock.

Key financial terms include built-in inflation protection for RYTHM. The annual fees will increase each January 1 by a "CPI Adjustment Rate," defined as two times the year-over-year change in the Consumer Price Index for All Urban Consumers. This escalator is subject to a maximum 10.0% cap and a floor preventing any annual decrease, protecting the Company's revenue base against deflationary periods. The structure offers investors clarity and stability regarding a significant portion of the Company's revenue generation.